SIPP allowable investments

Since the legislative changes to pensions at A-day, there are now many more opportunities open to today’s investor. One of the features of the new regime is that very little is banned. The approach taken by the legislation is to impose tax consequences on some transactions and leave the choice of the investment to the investor.

The rules are generally more flexible and accommodating than they used to be, the new regime offers several new opportunities to invest in a wide range of assets and exciting investment opportunities.

If HM Revenue & Customs allow it, so do we.

Annuity Supermarket will strive to get you the best annuity rates from the Open Market.

It is our policy not to impose Company rules on top of Revenue rules. As a result we can proudly claim ‘No other SIPP advisers allows more’.
Examples of some of the investments members have taken out can be found here:


Commercial Property


Deposit Accounts


Stock Exchange listed companies (listed on a HMRC or FSA recognised stock exchange)

AIM and OFEX Companies

Unit Trusts and OEICS (listed on a HMRC or FSA recognised stock exchange)

Government Securities

Fixed Interest Securities

Quoted Debentures and loan stocks

Shares in unquoted private companies

Offshore funds

Real Estate Investment Trusts (REITS)

Offshore funds

Hedge Funds

Insurance Company managed funds and unit linked funds

Second Hand Endowment Policies

Companies on an overseas exchange recognised by H M Revenue & Customs

Traded futures and options (relating to stocks and shares on a recognised exchange)

Contracts for Differences (CFD)


The member is responsible in conjunction with their Financial Adviser for choosing investments that are suitable for their individual circumstances.

If any transaction is to be carried out between the Registered Pension Scheme and the policyholder or any person connected with the policyholder, the transaction must take place at market value.

The minimum retirement age is increasing to 55

On 6 April 2010 the minimum age at which pension scheme members will be able to access their pension benefits will jump from 50 to 55.

Enhanced Annuities – Do You Qualify?

Mr Rogers has reached normal retirement age and is a member of his employer’s group pension scheme.

We were asked to provide quotations for an annuity bought under the Open Market Option. We quickly identified that Mr Rogers had medical conditions that might enable him to qualify for  Enhanced  Annuities (he had diabetes and bronchitis).

We initially obtained a standard rate illustration but after establishing further facts concerning his medical background, we were able to secure an uplift to his pension of 22% above the standard rates, by negotiating with several specialist annuity rate providers.

Based on standard rates, Mr Rogers pension fund (£30,800) would purchase an annual income of £2,323. Based on enhanced rates for impaired health, Mr Rogers fund eventually secured an income of £2,830, which equates to an additional £507 per annum.

Examples of some of the conditions that may qualify

  • cancer
  • heart conditions
  • diabetes
  • asthma
  • obesity
  • high blood pressure
  • organ transplants
  • stroke
  • liver disease
  • alzheimer’s
  • chronic lung disease
  • kidney disease
  • multiple sclerosis
  • Parkinson’s Disease
  • or a disease of the central nervous system.

For advice on annuities call 0800 043 0725

Group SIPP – Investing in Commercial Property

A Group Sipp can be used to hold a wide range of investments from shares, gilts, unit trusts, investment trusts, insurance company funds and commercial property (but not private property). A SIPP can be used for income drawdown.

This is particularly useful for owners of small businesses, who can buy premises through their pension funds. There are attractive tax advantages in using the fund to buy commercial property. The rental income is received tax-free by the fund and when the property is sold, which must be before the pension is drawn. There is no capital gains tax.

Someone with their own business might decide to use the property assets – such as offices, factories, agricultural land and warehouses – as part of a retirement nest egg. In this case, they would pay rent directly into their own pension fund rather than to a third party – usually an insurance company.

For specialist advice on SIPPs,  pension drawdown or annuity rates call 0800 043 0725

How can I invest in property via a SIPP?

One of the attractions of SIPPs is that they can be used to invest and develop commercial property, such as offices, industrial units or shops. Your pension fund does not even have to be large enough to buy a property outright as you can borrow up to 50 per cent of the fund’s net value.

In other words, if it is worth £150,000, you could borrow another £75,000 to buy a property for around £225,000. The rent from the property can be used to cover the mortgage repayments. If there is no mortgage, the rent will remain in your SIPP fund and can be used for other investments.

However, it is important to bear in mind that the costs of buying and managing a property in a SIPP can be fairly hefty. SIPP providers typically quote fees of between £500 and £750 for property purchase and there will also be legal and valuation fees to pay. In addition, ongoing annual management charges will be payable.

It is not possible to invest directly in residential property via a SIPP, although a commercial property with a residential element such as a caretaker’s flat may be permitted.

An alternative for those who want to invest in residential property may be to do so via property syndicate or collective fund. These schemes are allowed within SIPPs providing they have at least 10 investors and own at least three different properties worth a minimum of £1m in total.

Not all SIPP providers will currently accept these schemes and before investing, you should look carefully at how they work. Find out the level of borrowing as this will increase the risk and the amount you may have to pay for the maintenance of the properties as well as the costs to be covered when there are ‘void’ periods between lettings. Most importantly of all, you should find out your options for selling your investment.

Other property-related schemes which may be available within a SIPP are buy-to-let hotel room investments in the UK. It has been suggested that similar schemes abroad including ski chalets may also be suitable but some leading SIPP providers still feel this is a grey area. As the trustee, your SIPP provider has the final say on what can go into your pension.

By far the greatest demand for property investment within a SIPP is from small business people who want to buy their own business premises. Changes to the pension rules in April 2006 mean such purchases are now possible even if the property is already owned by the investor or someone connected to them.

Buying your own business premises within a SIPP can have several tax advantages. The rent paid into your SIPP is free of tax because it is a tax deductible expense. There will be no capital gains tax to pay on the property when it is sold within the pension fund and if you die before age 75 and before you start drawing your pension, your beneficiaries can receive the proceeds of the sale of the property free of inheritance tax.

To find an Independent Financial Adviser that can advise on SIPPs call 0800 043 0725

A refreshingly new approach to Independent Financial Advice

An Independent Financial Adviser is the only financial adviser who can provide advice that is specific and personal to your circumstances from products and services available from the whole market. An IFA will work for you and not the product provider.

Retirement Solutions is an independent financial adviser that specialises in giving advice in the annuities and equity release market.

Retirement Solutions Limited is a whole of market financial adviser. However, we choose to provide advice only in the areas where we have the necessary experience and expertise; annuities and equity release

If you would like us to arrange for an IFA to contact you then please click the form link below. We will then select the IFA who is best suited to advise you.

Income Drawdown with SIPP Options

The Prudential Flexible Retirement Plan (FRP) offers the following benefits:

  • Single product wrapper containing a personal pension, income drawdown and SIPP options
  • Account style structure allowing ease of transition between the different components of FRP
  • Ability to hold protected rights and non protected rights
  • Lifetime value charging structure with AMC discounts for fund size and longevity of investment (excludes the Self-Invested Fund and the Income Drawdown Holding Account)
  • Transparent and flexible
  • Wide range of investment options including the recent addition of our PruFund Cautious Funds, and PruSelect fund range

Find out more about how this product could benefit you call 0800 043 0725

Kevin Stelfox, Retirement Solutions, Independent Financial Advice on Income Drawdown


Where an individual is aged over 60 (but less than 75) and their total funds from all pension schemes is less than 1% of the Standard Lifetime allowance (SLA) the entire fund can be taken as a lump sum. For the tax year 2009/10, this will equates to £17,500

For example 2008/9 (SLA £1,650,000) if the fund is £16,500 or below, 25% can be taken as tax free cash (£4125) with the balance taken as cash but taxed as earned income.

Time Limit

If you wish to cash-in more than one pension, assuming you meet the qualifying criteria above, you must do so within 12-months of cashing-in the first one.  You will not be able to cash-in any pensions after that 12-month period has expired.

New Rules From 1 December 2009 (occupational schemes only)

These new rules apply to occupational pension schemes only.  They do not apply to personal pensions, stakeholder pension and SIPPs.

They allow small occupational pensions to be cashed-in under triviality rules even if the main rules above have not been met.

The following are the main qualifying criteria:

* You must be between 60 and 75;
* You must not be a controlling director of the sponsoring employer;
* The payment must not exceed £2,000;
* The payment extinguishes your right to benefits under the scheme; and
* There must not have been a transfer-out of the scheme in the 3 years preceding the date of payment; and
* The first 25% of the payment is tax-free, with the remaining 75% taxable under PAYE.

With profits annuities- A Quick Guide

To get over the perceived lack of flexibility and the potential erosion of your income due to inflation, with profits annuities work by investing your lump sum in the with profits fund of your chosen insurance company. By doing this, you bear the investment risk, not the insurance company.

At outset, rather than opting for a level annuity or one which increases each year, you assume a bonus rate. This will be the bonus rate applying to your with profits fund and if the fund achieves the bonus rate that you have assumed, your with profits annuity will remain level. If the bonus rate applied to the with profits fund is higher than that which you have assumed, your annuity for that year will rise and conversely, if the bonus rate falls, then your annuity will also fall for that year, or until bonus rates rise again above the level of bonus rate that you assumed at outset.

So, if you assume a bonus rate of 3%, and that is what is achieved, your annuity remains level. If after three years, the bonus rate increases to 5% (because of favourable equity markets) then your annuity income will rise too.

Thinking of buying a With Profits Annuity? Our Annuity Service provides:-

  • Depending on your pension provider up to 30% More Annuity Income
  • Specialist advice on different types of annuity arrnagement including investment annuities
  • Assessment of your circumstances to find the most suitable type of annuity for you or whether there are any other options more suited to you.
  • Information & Advice on lifestyle annuities – including  smoker annuities and impaired health annuities you may get even more annuity income.
  • Comparing annuity rates to ensure that you maximise your annuity income.
  • Explaining the annuity options available to you.
  • Helping you with the relevant paperwork to ensure that you annuity is processed smoothly.

Call us on 0800 043 0725

UK Equity Release Schemes can help boost your income

If your annuity does not give you the income you need then you can always look at equity release as a means to help you boost your income.

UK equity release schemes allow you to take an income or tax-free cash from your property. Available from age 55, if you have no mortgage or very little on our mortgage then you may qualify for an equity release scheme.

For a 65 year old typical amounts you can release are around 25% of the property value. So for a property worth around £200,000 this will allow you to release about £50,000 to spend on what you like. You could if you prefer drawdown a monthly amount instead and perhaps this would allow you to have a monthly income of £200.

These equity release schemes are similar to the reverse mortgages that are available in the US.